Winds of change, waves of progress
Who will be affected the most by the Companies (Amendment) Bill once it receives the assent of the President of the country?
“The secret of change is to focus all of your energy, not on fighting the old one, but on building the new.” These words of Socrates find relevance in the present moment when India Inc. is gearing up to adopt, adhere and put to practise the Companies (Amendment) Bill, 2017, once it receives the assent of the President of the country.
Of all the stakeholders impacted by the December 19 decision of the Parliament, it is the corporate and the professionals connected to them that will claim the strongest connection. The 28-page document made quite some waves within moments of gaining Parliament approval. The government in general and the Ministry of Corporate Affairs in particular needs to be applauded for their detailed analysis to understand the issues that have cropped since-the loopholes, the gaps, the need for harmonisation among the laws that comprise the legal framework encasing the India Inc--and their efforts to address them.
The Parliament passed the Companies (Amendment) Bill, 2017, to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve ease of doing business in the country. Each amendment, each new insertion, each alteration will have a lasting impact on the overall functioning mechanism and regulatory framework of Indian corporates. From altering and amending the basic definitions to enhancing timelines, from amending sections to providing better explanation to adding provisos catering to exceptions, from keeping all corporates on equal footing to comprehending the distinctions on the basis of size and providing relief from stringent compliance — the short document does it all.
The Bill has not only increased the number of days of notice to be given for change of location of a registered office but has also relaxed the requirement of independent directors in the CSR Committee for companies not bound to appoint them in the first place. The alteration in the definition of ‘related party’ has expanded the purview of the law, bringing in its ambit the investing companies and ventures whose investment would result in the company becoming an associate of the body corporate. Focussing on the agenda of ‘ease of doing business’, not only has the filing of a separate form for annual return been done away with, an abridged form of annual return for OPC and small companies has also been made part of the provision.
Stringent penalties in case of noncompliance, mandatory signing of financial statements by the CEO irrespective of his directorship status are just some of the amendments in the 92-point Bill.
While corporations are impacted directly, it is the brigade of professionals who will be the guiding light for these stakeholders. Company secretaries, who are concerned with the various rules and regulations of the Companies Act, shall have a big role to play. The changing dimensions, the shifting focus and the altering boundaries call for deeper knowledge and more involved role play on behalf of these professionals.
The seemingly small document is by far the second major wave following plenty of small ones. But then it is always the bigger waves that alter the sand patterns, leave something behind, take something along and alter the course of ships on their way. The Companies (Amendment) Bill 2017, as of now, has all the makings of that one big wave. What needs to be seen is how corporate ships steer themselves to reach their destinations of good governance. As George Bernard Shaw once said, “Progress is impossible without change, and those who cannot change their minds, cannot change anything.”